A writer must “know and have an ever-present consciousness that this world is a world of fools and rogues… tormented with envy, consumed with vanity; selfish, false, cruel, cursed with illusions… He should free himself of all doctrines, theories, etiquettes, politics…” —Ambrose Bierce (1842-1914?). “The nobility of the writer's occupation lies in resisting oppression, thus in accepting isolation” —Albert Camus (1913-1960). “What are you gonna do” —Bertha Brown (1895-1987).

Thursday, November 6, 2014

Phoenix voters reject pension overhaul backed by billionaire

(Reuters) – “Voters in Phoenix
have rejected a proposal, funded in part by a hedge fund billionaire, to
convert the pension system for city workers to a 401k-style retirement plan
favored by most U.S. private employers.

“In a big victory for city
labor unions, voters rejected Proposition 487 by a margin of 56.5 percent to
43.5 percent, according to results posted online by the Maricopa County
Recorder/Elections Office.

“The measure proposed to
end the city's traditional defined-benefit pension plan for new workers,
shifting them to a plan dominant in the private sector, with employees pay a
far greater share of the cost. Existing workers could have kept their current
pensions.

“The initiative was one of
this year's biggest test cases pushed by pension-reform advocates, including
Texas billionaire and former Enron executive John Arnold, who have argued that
traditional pension plans are an increasingly unaffordable burden for
cash-strapped state and local governments…”

In Illinois: “TRS assets are held in
trust and are invested for exclusive benefit of [defined-benefit] plan
members. The market value of assets increased to $45,824,382,514. during
the year that ended on June 30, 2014 from the start of the fiscal year when the
Teachers Retirement System had held $39,858,768,499. TRS investments
grew by 17.42% net
of fees” (Bob Lyons, Elected TRS Annuitant).

Commentary: A Defined-Benefit Pension Plan

1)You cannot outlive your defined-benefit
pension plan; you can outlive a 401 k plan or defined-contribution savings
plan;2) Your defined-benefit pension plan is more cost
efficient than the defined-contribution savings plan;
3)Your defined-benefit pension plan
offers predictable, guaranteed monthly benefits for life; 4)Funds
are invested by professional asset managers in a diversified portfolio that
follows long-term investment strategies; 5)The
large-pooled assets reduce asset management and miscellaneous fees; 6)Your
defined-benefit pension plan provides spousal (survivor) financial benefits; 7)Your
defined-benefit pension plan provides disability benefits; 8)The
state is responsible for funding, investment, inflationary and longevity risks;
9)Because
you are not affected by Market volatility, your defined-benefit pension plan is
a more effective protection than the defined-contribution savings plan;10) Because teachers understand the value of such a
plan, they are willing to give up higher wages;11) A defined-benefit plan encourages a long-term
career and stable workforce; 12) Your defined-benefit pension plan
provides you with self-sufficiency in retirement; it is associated with far
fewer households that experience food privation, shelter adversity and
health-care hardship; 13) Your defined-benefit pension plan is
less expensive for taxpayers than Social Security – a reason why legislators,
et al. had negotiated for Illinois teachers to not pay into Social Security;14) The Teachers Retirement System of
Illinois is the 39th largest in the U.S. with 366,000 members (2012) (TRS); 15) The average investment returns for TRS:
9.6% (1982-2012) (TRS);
16) Your defined-benefit pension plan has an
economic impact of over $4 billion on Illinois; the effect on Gross Domestic
Product is $2.38 billion; jobs that are created: 30,448 (Teachers Retirement
System of Illinois, TRS); 17) Defined-benefit pension plans contribute
over $100 billion to annual local, state, and federal revenue in the U.S. and
provide capital to financial markets (NIRS).

Sources: the National Institute on Retirement
Security (NIRS), Center for Retirement Research at Boston College, National
Conference on Public Employee Retirement Systems, Center on Budget and Policy
Priorities, and the Teachers Retirement System of Illinois (TRS)

Watch the 13-minute 60 Minutes: 401k Recession segment,
especially an interview of a lobbyist for the 401(k) industry named David Wray
(who is also president of the profit-sharing 401(k) Council of America): “What kind of retirement plan allows millions of people to lose 30 to 50% of
their life earnings?” Click here for video.

1 comment:

To impair the obligation of a contract is to lessen its value. "Any law which changes the intention and legal effect of the original parties, giving to one a greater and to the other a less interest or benefit in the contract, impairs its obligation" (115 A. 484, 486). State statutes which do so are prohibited by Article 1, Section 10 of the United States Constitution. There are seven states that have a legal basis for protection of public pension rights explicitly expressed in their state constitution: Illinois, New York, Alaska, Arizona, Hawaii, Louisiana and Michigan. Both "past and future" accruals are only protected in Illinois, New York and Alaska.

Teacher/Poet/Musician

Copyrights & Fair Use: This blog contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. I am making such material available in my efforts to advance understanding of issues vital to a democracy. I believe this constitutes a “fair use” of any such copyrighted material as provided for in section 107 of the U.S. Copyright Law.

Persona

"I want everything to be explained to me or nothing. And reason is impotent when it hears this cry from the heart. The mind aroused by this insistence seeks and finds nothing but contradiction and nonsense" —Albert Camus (1913-1960).